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ZTO Express (Cayman) (NYSE:ZTO) reported second-quarter 2026 results that showed higher revenue, profit and parcel volume as China’s express-delivery market moved toward what management described as more rational competition and improved pricing conditions.
Chairman and Chief Executive Officer Meisong Lai said industry parcel volume grew 4.2% year over year during the quarter, while anti-monopoly policies helped shift the sector away from price-driven competition. ZTO’s parcel volume increased 6.5% to 10.9 billion, according to Chief Financial Officer Huiping Yan, and the company gained 0.4 percentage points of market share.
Pricing, margins and operating costs
Yan said the average selling price for ZTO’s core express-delivery business increased CNY0.19, or 15.5%, year over year. The increase included a CNY0.17 benefit primarily tied to a greater mix of key-account volume, including higher-value reverse-logistics services, as well as a CNY0.02 increase resulting from higher average parcel weight.
Total cost of revenue rose 21.7% to CNY10.8 billion. Core express-delivery unit costs increased CNY0.12, or 14.6%, including a CNY0.14 increase associated with the company’s strategic expansion of key-account volume.
Despite pressure from higher oil prices, ZTO reduced its combined unit sorting and transportation costs by CNY0.02 year over year. Unit line-haul transportation costs declined 3.7% to CNY0.32, while unit sorting costs fell 2.6% to CNY0.24. Yan attributed the reductions to route optimization, improved load rates, labor productivity and automation.
Gross profit increased 26.8% to CNY3.7 billion, and gross margin expanded 0.8 percentage points to 25.7%. Selling, general and administrative expenses excluding share-based compensation declined 10.5% to CNY555.5 million, representing 3.8% of revenue. Adjusted EBITDA rose 20% to CNY4.2 billion, while operating cash flow totaled CNY4.6 billion.
Retail and reverse-logistics growth
Lai highlighted retail parcels and reverse logistics as an important part of ZTO’s product-diversification strategy. Retail parcel volume rose 47% year over year during the quarter, he said.
Average daily retail parcel volume exceeded 11.87 million in the second quarter, including approximately 9.8 million daily return parcels. Return-parcel volume increased about 80% from a year earlier, according to Lai.
While reverse-logistics parcel pricing has declined amid market competition, Lai said the business continues to generate higher profit per parcel than standardized e-commerce delivery. Management expects profitability in the segment to improve further through scale and refined cost controls.
The company said it is prioritizing “high-quality” market share, differentiated service capabilities and improved earnings for its franchise outlets and couriers rather than pursuing short-term volume expansion at any cost.
AI and network efficiency initiatives
In response to an analyst question, Lai said ZTO is deploying artificial intelligence and digital tools across pickup, transit, delivery and network management. He said the company’s intelligent routing and dispatch system has been applied to six common transportation scenarios, with route-coordinated parcel volume rising 120% year over year and stranded parcels declining 15%.
During the first half of 2026, AI-related transportation savings accounted for about 10% of the company’s total transportation-cost reduction, Lai said. ZTO’s smart park system now covers all transit centers nationwide, using machine vision to monitor operations and flag 28 types of anomalies. The company said unloading efficiency increased 4% and anomaly traceability coverage reached 88.4%.
ZTO also said its data agent serves more than 2,000 managers at headquarters and provincial offices, reducing routing-analysis time by more than 90%. Its precision-address system covers more than 250,000 frontline couriers, while more than 90% of merchant inquiries and ticketing are resolved through AI self-service, according to management.
Guidance and outlook
ZTO updated its full-year 2026 parcel-volume growth outlook to 6% to 10% year over year, representing projected volume of 40.83 billion to 42.37 billion parcels. Yan said management expects the broader industry’s parcel-volume growth to remain stable as the market continues its transition toward service quality and operating efficiency.
The company expects core transit-operation costs to decline by CNY0.03 for the full year. However, management said fuel prices could continue to add approximately CNY0.01 to CNY0.02 to per-parcel transportation costs in the second half. ZTO said it plans to mitigate volatility through lower-cost fuel reserves, expanded use of natural-gas trucks and exploration of electric vehicles for express-delivery operations.
Second-quarter capital expenditures totaled $952 million, according to Yan, and the company expects 2026 capital expenditures of around CNY6 billion.
Management also discussed the gradual expansion of social-insurance requirements for delivery workers. Sophie Li, company secretary and director of capital markets, said standardized social-security initiatives could increase end-to-end costs in the near term, but may strengthen network stability, reduce courier turnover and improve last-mile service quality over time.
About ZTO Express (Cayman) (NYSE:ZTO)
ZTO Express (Cayman) Inc is one of China’s leading express delivery companies, specializing in both domestic and cross-border parcel logistics. The company operates a technology-enabled network that connects shippers, independent pickup and delivery stations, regional sorting hubs and end customers. ZTO’s service portfolio includes standard express, heavy-weight parcel delivery, time-definite shipments and e-commerce logistics solutions tailored for online retailers and marketplaces.
Founded in 2002 and headquartered in Shanghai, ZTO has grown rapidly by leveraging a franchise-style operating model that engages a broad network of independent contractors.
